Tata Communications Challenge Rs. 1,197.7 Crore DoT Payment

Tata Communications has challenged the DoT's demand for payment of AGR dues worth Rs. 1,199.7 Crore. The company has challenged the reasoning behind the said demand.

Tata Communications and AGR Dues

Tata said that the international and national long distance (ILD & NLD) licenses owned by the company do not fall under the purview of Supreme Court’s adjusted gross revenue (AGR) verdict. Furthermore, it reported in its financial statement on Wednesday that it has paid Rs. 379.5 Crore to DoT during the last quarter. Also, the company reported a profit of Rs 67.38 crore by selling a land parcel along with building. However, it also registered an expense of Rs Rs 5.92 crore relating to demerger of surplus land.

Notably, DoT demanded Rs. 6,633.4 Crore from Tata Communications in September 2019. This followed after the Supreme Court’s ruling on AGR dues of telecom companies.

In a statement, Tata Communications described the reason for the said dispute.

“The demands received by the Company included an amount of Rs 543370 lakhs which were disallowed by the DoT towards the cost adjusted to Gross Revenues by the Company that were claimed on ‘accrual’ basis instead of payment basis, for which revised statements on the basis of actual payment has been submitted to the DoT.”

Further stating that it has a “case to defend", the company explained the dispute further. It said, "it has made a provision of Rs 33717 lakhs during the quarter ended March 31, 2020 and for the balance amount of Rs 509653 lakhs, the Company believes that the likelihood of the same materializing is remote since the deduction on payment basis has not been considered by the DoT.”

“The future profitability of TCPSL is dependent upon revised business model and increase in the Inter Bank Rate (IBR) which is subject to regulatory clearance,” it said.

Tata Communications' Financial Health

Notably, the company’s subsidiary Tata Communications Payment Solution Ltd (TCPSL) has accumulated losses of Rs Rs 1476.9 crore. According to the said financial statement, Tata Communications noted a profit of Rs 299 crore in January-March period. This reflected a loss of 3.2% against the profit of Rs. 309 Crore it made the previous quarter.

Incidentally, it made a loss of Rs 275 crore during the same time frame in 2020.

Along with this, it registered a consolidated revenue of Rs 4,073 crore, which was less by 7.4% year-on-year. The report attributed the dip to slowdown in voice business and data business. Data revenue was at Rs 3,515 crore, down by 2.2% year-on-year.